In July 2015, the chief executive officer of Toshiba Corporation (Toshiba) resigned over the revelation of a JP¥151.8 billion accounting scandal that shocked the world. Toshiba, a Japanese multinational conglomerate with net sales of JP¥6.5 trillion and total assets of ¥6.2 trillion, had been widely criticized in the news for the multi-billion-dollar accounting fraud. The company’s stock prices declined by 38 per cent after the accounting probe was announced, and the company withdrew the dividend that had been declared earlier. These setbacks challenged company investors, who had always regarded Toshiba as a reputable company. The investors were wondering the same thing as everyone else watching the scandal unfold: How could a company with a 140-year history do this, and why? What were the consequences? What should Toshiba do in response to this crisis?
In January 2016, the program director of Royal FloraHolland and a supply chain consultant met to develop a supply chain strategy that would allow Royal FloraHolland to adapt to the changing competitive environment that jeopardized its business model. Royal FloraHolland was the largest floriculture auction organization in the world, selling more than 30 million flowers and plants daily. Located in the Netherlands, Royal FloraHolland was a co-operative owned by 4,500 growers. A century-long tradition, where buyers purchased flowers and plants through the Dutch flower auction clock, was being threatened. Pressures facing Royal FloraHolland included emerging global competition, industry consolidation, and customers bypassing the auction process to buy directly from the growers. The two supply chain experts considered opportunities and challenges that lay ahead for the organization.
Me to We was a Canadian social enterprise created in 2008 to provide a stable source of funds to finance Free the Children, a non-profit organization that partnered with villages in Latin America, Africa, and Asia to provide clean water, sanitation, health care, food security, and alternative income in exchange for the commitment that all village children would attend school. The ultimate aim was to reduce child labour and exploitation, which was rooted in families who were living in poverty and unable to support themselves. In 2015, as Me to We continued to grow, the co-founders realized that its product portfolio could benefit from items that would increase the frequency of the organization's contact and interactions with customers. Should Me to We move towards the fast consumables market to reach as many people as possible?
In 2015, Burger King France operated 26 Burger King restaurants in France and had ambitious plans for growth. In a press release, Burger King France shareholders announced the projected acquisition of Quick, a chain of 509 fast-food restaurants operating in France and a few other countries. Burger King France intended to gradually convert the Quick restaurants into Burger King restaurants-a move that would turn Burger King into the second-largest fast-food chain in France. While this acquisition provided a significant growth option for the Burger King chain, it also posed several challenges in the form of brand image, company culture, and the many issues that could come with the process of converting and internationalizing a chain within its home country.
In June 2015, the Toyota Motor Corporation's annual shareholders' meeting included a proposal regarding Toyota's new share issue. Named "Model AA" shares after the company's first passenger car, the shares would offer investors new hybrid securities. This proposal created a lot of controversy among existing shareholders. Although President Toyoda claimed that no one would be disadvantaged by these shares, it remained unclear how many shareholders had confidence in this assurance. The share issue, which would potentially comprise up to 5 per cent of Toyota's total outstanding shares, would require the support of a two-thirds majority of shareholders. The new shares looked like ordinary shares with a "lock-up" period or preferred shares with voting rights. At the same time, Model AA shares resembled a convertible debt issue with voting rights (with a conversion ratio to be determined later). It was time to vote on the approval of Toyota's new share issue, but the following questions lingered in the shareholders' minds: what exactly was the difference between Model AA shares and ordinary shares? What was the difference between Model AA shares and bonds (or convertible bonds)? Finally, if the vote was approved, how should Model AA shares be priced?
By late 2015, the chief executive officer of Devonian Coast Wineries in the Canadian province of Nova Scotia had invested in the business and had broadened the distribution of the wines he produced. His chief concern was growing sales beyond Nova Scotia's provincial borders. Selling wines in other provinces was difficult because it required approaching the various provincial liquor control boards. He had three options: continue to engage with each provincial liquor board's buyers, lobby for greater retail access, or pursue the removal of provincial barriers to wine trade within the Atlantic provinces. If all interprovincial barriers were removed, he would need to compete with other provinces' larger wine producers, and they would likely gain market share at the expense of local wineries. What was the best strategy to expand Devonian Coast Wineries' distribution beyond Nova Scotia?
In July 2015, the chief executive officer of Toshiba Corporation (Toshiba) resigned over the revelation of a JPÂ¥151.8 billion accounting scandal that shocked the world. Toshiba, a Japanese multinational conglomerate with net sales of JPÂ¥6.5 trillion and total assets of JPÂ¥6.2 trillion, had been widely criticized in the news for the multi-billion-dollar accounting fraud. The company's stock prices declined by 38% after the accounting probe was announced, and the company withdrew the dividend that had been declared earlier. These setbacks challenged company investors, who had always regarded Toshiba as a reputable company. The investors were wondering the same thing as everyone else watching the scandal unfold: how could a company with a 140-year history do this, and why? What were the consequences? What should Toshiba do in response to this crisis?
In 2014, the chief executives officers of Amazon and Future Group led their companies into an alliance that, while initially successful, encountered some difficulties in regards to discounts on their retail products. With the global retail industry standing at US$25.4 trillion in 2016, and the percentage of which e-commerce made up 7.4 per cent, the partners would have to decide if they should resolve their conflict and remain allies, or if they should consider becoming independent companies again. If one partner placed a higher value on the use of discounts than the other, how much was the alliance really worth?
At the end of 2014, the owner of India-based Thakur Engineering Works (TEW) was at a crossroads in determining his company's future. After more than two decades of solidly building the family business's reputation at home, the producer and supplier of auto parts was poised for expansion either domestically or globally. TEW already produced parts that were shipped overseas via domestic exporters. The owner could not help but wonder about the possibility of simply shipping the parts directly to foreign clients. While that decision would require changes to its logistics and operations and would incur costs related to exports, the owner could not ignore the pay-off in profits. In India, the auto parts market was experiencing a slowdown, resulting in fierce competition, price reductions, and pressure to deliver parts faster. Despite these challenges, the Indian market was one he understood, so expansion there carried little risk. Should TEW continue to focus on increasing its market position domestically or was the time right for TEW to target the more profitable global market?
In May 2015, Alankit Life Care Limited was concerned about the future of Rx Pharmacy, its online pharmacy retail venture. The company had both a physical and an online platform for Rx Pharmacy, but the physical stores were not doing well due to aggressive marketing strategies adopted by competitors. Government regulations also presented a threat to the future of the online pharmacy. Rx Pharmacy was targeting a customer base of 50,000 customers and 2,000 associated retail pharmacies by 2016. It also hoped to achieve a pan-India presence, like the other companies within Alankit Group. However, the company was unsure about how to achieve its goals. Would Rx Pharmacy need both a physical and a digital retail platform, or was it best to pursue only the online path? What strategies could help to strengthen the online business?
In 1959, Unilever was one of the world's most internationally established companies, and its products had gained substantial market share in the consumer goods segment. Unilever was prepared to make a capital investment outside its home market of Europe, and considered entering one of two developing economies (disguised in these documents). The (A) case relates to the decision in 1959, whereas the (B) case revisits the same decision in 1969. Balonia and Banchuria were two of the world's poorest areas, and both had begun to emerge from their post-colonial ties to adopt policies and establish institutions in an effort to spur economic growth. Unilever's strategic planning group needed to weigh the data on these economies and make an entry recommendation as to which location provided the better investment environment.
This Reading examines what it takes to build a successful managerial career. The Essential Reading section contends that a managerial role, by its nature, imposes learning needs that cannot be fully taught in the classroom but must be mastered throughout one's career. It then presents the Developmental Strategies Framework, which focuses on three recurring career challenges: (1) choosing the right position, (2) developing managerial skills by learning from stretch assignments and through periodic reflection, and (3) getting help by building a developmental network. The Reading includes two Supplemental Reading sections: one discusses an approach to honing ethical judgment; the other presents a way to think about integrating work and life goals. The Reading features five videos: "A Great Job Fit," which deals with how to choose new positions; "Seek Challenges," which advocates finding assignments that expand one's knowledge and skill set; "Forging a New Global Comfort Zone," covering the advantages of taking on international opportunities; "Seek Mentors Who Expand Your Comfort Zone," offering advice on how to use mentors; and "Ethical Ambiguity," which provides guidance on the ethical dimensions of managerial decision making. The Reading also includes an Interactive Illustration, "Work Values and Job Selection," in which readers rate five job opportunities, separately rate the importance of nine work values to them, and then analyze whether their job ratings are consistent with their work values.
This Reading argues that decision making is systematically flawed and introduces methods to improve decision-making effectiveness. The Essential Reading section covers the rational decision-making model and three important ideas that challenge it: Herbert Simon's concept of bounded rationality, Amos Tversky and Daniel Kahneman's work on heuristics and biases, and Keith Stanovich and Richard West's conceptualization of System 1 and System 2 thinking. The Reading then discusses seven common biases or heuristics, along with ways to mitigate them, and lists additional common biases to show the broad range of issues that can influence decision making. The authors also describe biases and additional decision-making challenges that are particular to groups. Finally, the Essential Reading draws on Richard Thaler and Cass Sunstein's concept of choice architecture to present a new framework for better decision making. The Reading includes two Supplemental Reading sections that deal with how motivation and emotion affect decisions, and how flawed decision-making processes can compromise ethics. The Reading also features two videos and one Interactive Illustration.
This reading introduces the theory of capital structure. It explores the determinants of an optimal capital structure-first in the context of Modigliani and Miller's (M&M's) perfect market conditions, and then as M&M conditions are selectively relaxed. The reading begins with an overview and comparison of the distinctive characteristics of debt and equity securities and why the choice between them is relevant. The effects of leverage on measures of company financial performance and on the allocation of risk between debt and equity holders follow, laying the groundwork for a discussion of capital structure choice that is initially cast in terms of selecting a target leverage ratio. Next, the M&M propositions are introduced and readers learn why, under perfect market conditions, financing decisions are irrelevant to firm value. Numerical examples and an interactive illustration are used to illustrate the propositions. The M&M conditions are then relaxed to include taxes, financial distress, agency costs, asymmetric information, etc. Alternative theories of optimal capital structure-including the static tradeoff model and pecking order theory-are developed and compared. The Supplemental Reading covers the difficulties of resetting capital structure once firms are overleveraged and also provides some real-world context for how corporate managers make capital structure decisions.
Akhil Patel is passionate about his business idea: an innovative green technology fuel cell. He wants to dive in and commit to his startup, but Roopa Rao, his fiancee, is much more risk averse, his parents don't approve of the startup, and Akhil has an enticing alternative offer from a prestigious consulting firm. Should Akhil follow his dream and become an entrepreneur? Or should he acquiesce to the other forces in his life and take the "safer" consulting job?
Economic growth in developed nations relies on solving the productivity puzzle: How do we increase the amount of economic output produced for every hour of labour? In practice, labour productivity is calculated as gross domestic product divided by aggregate hours worked. Economy-wide productivity gains often rely on technological innovation, which can straddle various categories, including product versus process, radical versus incremental, and disruptive versus sustaining. This technical note considers four of the most popular strategies to drive productivity growth: intellectual property protection; geographic clusters; investments in science, technology, engineering, and mathematics; and fostering an entrepreneurial spirit.
Economic growth in developed nations relies on solving the productivity puzzle: How do we increase the amount of economic output produced for every hour of labour? In practice, labour productivity is calculated as gross domestic product divided by aggregate hours worked. Economy-wide productivity gains often rely on technological innovation, which can straddle various categories, including product versus process, radical versus incremental, and disruptive versus sustaining. This technical note considers four of the most popular strategies to drive productivity growth: intellectual property protection; geographic clusters; investments in science, technology, engineering, and mathematics; and fostering an entrepreneurial spirit.
Privatization of state-owned enterprises represents a significant realm of business for investment banks around the world. It also involves balancing a number of sometimes conflicting objectives among buyers and sellers and a host of risks for both sides as well as the financial firm itself. This case focuses on a large partial privatization in the Middle East that illustrates all of these issues and came to define the requirements for investment banks to perform successfully in future privatizations.
A multi-issue 1-on-1 collective bargaining agreement (CBA) negotiation between the Senior Manager of Labor Relations (Monika Schmidt) and the new head of the Astra Workers' Federation (Karim Faizal). Astra Precision is the Indian subsidiary of a German auto company. Recently, when violence erupted over working conditions, Astra went into a lockout and lost $300 million.